Correlation Between CompuGroup Medical and KENNAMETAL INC

Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical and KENNAMETAL INC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CompuGroup Medical and KENNAMETAL INC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompuGroup Medical SE and KENNAMETAL INC, you can compare the effects of market volatilities on CompuGroup Medical and KENNAMETAL INC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CompuGroup Medical with a short position of KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and KENNAMETAL INC.

Diversification Opportunities for CompuGroup Medical and KENNAMETAL INC

0.0

Correlation Coefficient

CompuGroup Medical  KENNAMETAL INC

Pay attention - limited upside

The 3 months correlation between CompuGroup and KENNAMETAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC and CompuGroup Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CompuGroup Medical SE are associated (or correlated) with KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of CompuGroup Medical i.e., CompuGroup Medical and KENNAMETAL INC go up and down completely randomly.

Pair Corralation between CompuGroup Medical and KENNAMETAL INC

If you would invest  2,176  in CompuGroup Medical SE on December 28, 2024 and sell it today you would earn a total of  84.00  from holding CompuGroup Medical SE or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CompuGroup Medical SE  vs.  KENNAMETAL INC

CompuGroup Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CompuGroup Medical SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CompuGroup Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

KENNAMETAL INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days KENNAMETAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KENNAMETAL INC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CompuGroup Medical and KENNAMETAL INC

The main advantage of trading using opposite CompuGroup Medical and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical position performs unexpectedly, KENNAMETAL INC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.

The idea behind CompuGroup Medical SE and KENNAMETAL INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.